PRINCIPAL COMMISSIONER OF INCOME TAX-4 vs. M/S JEANS KNIT PVT LTD

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ITA/218/2022HC KarnatakaKAHC01022275202105 June 2023Bench: P.S.DINESH KUMAR,T.G. SHIVASHANKARE GOWDA3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The Court noted that the issues involved in the present appeal were covered against the Revenue by a previous decision of a Division Bench of the same court in the case of Pr. Commissioner of Income Tax and Another Vs. M/s. Jeans Knit Pvt.Ltd. Consequently, the questions of law were answered in favour of the assessee and against the Revenue. The operative direction was to dismiss the appeal. No specific finding was recorded on each individual issue raised by the Revenue, as the appeal was decided based on the precedent.

What were the facts?

The Revenue, comprising the Principal Commissioner of Income Tax-4 and the Deputy Commissioner of Income Tax, filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order dated July 12, 2019, passed by the Income Tax Appellate Tribunal (ITAT), Bengaluru. The appeal pertains to Assessment Year 2011-2012 and challenges the ITAT's decision regarding a claim made by the assessee, M/s. Jeans Knit Pvt. Ltd., under Section 10B of the Act. The procedural history involves the ITAT's order in ITA No.1325/Bang/2014, which is now under challenge before the High Court.

What were the issues?

The Tribunal had to decide two questions of law: 1. Whether the Tribunal was justified in allowing the assessee's claim under Section 10B of the Act, considering the business structure was formed through reconstruction or by using existing business amenities, which the Assessing Officer deemed void under Section 10B, rendering the Tribunal's order perverse. 2. Whether the Tribunal was justified in setting aside the issue of enhanced deduction under Section 10B, when the Assessing Officer had stated that no additional claim could be allowed unless it was originally claimed in the return of income. The Revenue argued that the assessee's business structure violated Section 10B, making the claim void and the Tribunal's order perverse. The Revenue also contended that enhanced deductions under Section 10B could not be allowed if not initially claimed in the return. The assessee's arguments are not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 10B,Section 260-A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, - 3 -

- 1 - ITA No. 218/2022

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 5TH DAY OF JUNE, 2023 PRESENT THE HON'BLE MR JUSTICE P.S.DINESH KUMAR AND THE HON'BLE MR JUSTICE T.G. SHIVASHANKARE GOWDA INCOME TAX APPEAL NO.218 OF 2022

BETWEEN:

1.

PRINCIPAL COMMISSIONER OF INCOME TAX-4 BMTC COMPLEX, KORAMANGALA BENGALURU

2.

DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 11(5), NO. 14/3 5TH FLOOR, NRUPATHUNGA ROAD BENGALURLU-560 001. …APPELLANTS

(BY SHRI. E.I. SANMATHI, ADVOCATE)

AND:

M/s. JEANS KNIT PVT. LTD. NO. 21-E-1, 2ND PHASE INDUSTRIAL AREA PEENYA BENGALURU-560 058. PAN: AABCJ 4513 B …RESPONDENT

THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 12/07/2019 PASSED IN ITA NO. 1325/BANG/2014, FOR THE ASSESSMENT YEAR 2011-2012, PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT AND ETC.

THIS ITA, COMING ON FOR ORDERS, THIS DAY, P.S.DINESH KUMAR, J., DELIVERED THE FOLLOWING:

Digitally signed by ANUSHA V Location: HIGH COURT OF KARNATAKA

- 2 - ITA No. 218/2022

JUDGMENT

This appeal by the Revenue directed against order dated July 12, 2019 in ITA No.1325/Bang/2014 passed by the ITAT1, Bengaluru, for A.Y.2011-12 has been filed to consider following questions of law: 1. Whether on the facts and circumstances of the case, the Tribunal is justified in allowing the appeal of the assessee regarding allowance of claim made under section 10B of the Act despite the fact that the assessee’s business structure is formed under reconstruction of business or using the existing amenities of business for a new business, which is void as per the provisions of section 10B of the Act as clearly brought out by the assessing Officer in his order and as such order passed by Tribunal is perverse in nature?

2.

Whether on the facts and circumstances of the case, the Tribunal is justified in setting aside the issue of claim made by the assessee for giving enhanced deduction under section 10B of the Act where the assessing officer has clearly brought out the fact that no additional claim can be allowed to the assessee unless the same is claimed in the return of income?

2.

Heard Shri E.I.Sanmathi, learned standing counsel for the Revenue. In his usual fairness, he submitted

1 Income Tax Appellate Tribunal

- 3 - ITA No. 218/2022

that the issues involved in this appeal are covered against the Revenue by decision of Division Bench of this court in Pr.Commissioner of Income Tax and Another Vs. M/s. Jeans Knit Pvt.Ltd2. His submission is placed on record.

3.

In the circumstance, the following; ORDER (i) Appeal is dismissed; and (ii) Questions of law are answered in favour of assessee and against the Revenue. No costs.

Sd/- JUDGE

Sd/- JUDGE

AV List No.: 1 Sl No.: 1

2 ITA No.559/2015 c.w. ITAs No.571 & 580 of 2016 (DD.19.10.2020)

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